Sugar compensation deal announced

Sugar growers will get compensation for cuts in sugar beet prices based on contracted tonnage in 2005/2006 – a move welcomed by the NFU.

The announcement, made by Defra on Friday, also confirmed the additional payments from 2007 SPS (option two in the consultation document) will be paid exclusively to sugar beet growers. In June Defra announced the £52m earmarked for 2006 would be added entirely to entitlements held by sugar beet growers.

Chairman for NFU sugar John Hoyles said: "We are pleased Defra has accepted our arguments and taken option two and welcome the clarification on reference year. Following last week's announcement by Defra the reference year would not be 2007/2008 or subsequent years, growers can now be sure that contract trading will have no impact on their compensation entitlement.

"However there are concerns the announcement makes no reference to the deficit area premium, worth 10mln euros/annum. This was widely heralded by Defra as a tangible UK win for our beet sugar industry.

"We would expect this to be paid entirely to those sugar growers in the reference year and seek early clarification from Defra on this issue."